Spring 2018: a Brussels Brexit stock-take

Is the rocky road to Brexit obscured by London fog? Taking stock from Brussels, Evanna Fruithof joins calls for fewer speeches and more legal texts

March 2018 saw several significant milestones on the rocky road to Brexit, not least 29 March marking one calendar year before the UK formally leaves the EU, assuming all remains on track. It is timely to take stock of what has been achieved and look at what we can expect over the coming months.

The month started with Theresa May’s speech on the future economic relationship, delivered on 2 March at Mansion House. This complemented her earlier speech on future security cooperation, delivered in Munich on 17 February. Whilst relatively well received in Brussels and other EU capitals, the core reaction was that the time for speeches is long past. What we need now are draft legal texts. It’s all well and good on the one hand talking about ‘the broadest and deepest possible partnership’ whilst on the other maintaining the government’s red lines of staying outside the Internal Market, the Customs Union and the jurisdiction of the Court of Justice of the EU (CJEU), but how do you reconcile these objectives? As one commentator put it, there is an ‘impenetrable London fog surrounding the British government’s approach to basic issues, like its preferred future trade relations with the EU’. The bottom line is: can a legal framework be devised that balances those competing objectives, is agreeable to all sides, legally workable and enforceable?

On the EU side, efforts to do just that – to draft the texts that will bring Brexit about, and underpin the future relationship, are already well under way. On 28 February, the Commission released a Draft of the Withdrawal Agreement (DWA) which became the ‘joint legal text’ presented by Michel Barnier, the EU’s Chief Negotiator, and David Davis on 19 March. In a colour coded table, the DWA details the areas of agreement and divergence on the so-called separation topics as well as the terms of the transition arrangements.

Draft Withdrawal Agreement: separation topics

Full agreement was achieved on the legal translation of the points agreed in December on citizens’ rights and the financial settlement. Regarding citizens’ rights, that means that British and EU27 citizens who arrive in a new country during the transition period will benefit from the same rights and guarantees as those who arrived before Brexit day. It is worth emphasising that the citizens’ rights that are to be protected in the Withdrawal Agreement (WA) are based on residence. The Bar is looking at citizens’ rights in the wider sense in the context of the future relationship (FR), on which see more below. Progress was also made on other separation topics, such as the winding-up of customs procedures, goods placed on the market, and protection of European trade marks. Negotiations continue on trickier separation ones, including the protection of data and the automatic recognition of judgments, and of course on Ireland.

Agreement on the transition period

The terms of the transition agreement remain as foreseen by the EU27 heads of state in January. In summary, the UK will:

remain bound by the full EU acquis but will no longer take part in EU decision-making – it will maintain all the advantages and benefits of the Single Market, the Customs Union, and EU policies, and should respect all EU rules as if it remained a member state;

have a limited opt-in to justice and home affairs measures;

use the transition period to negotiate, but not enter, agreements with third countries.

Furthermore, transition will end on 31 December 2020 or earlier if the terms of the FR have already been agreed. Negotiations will be conducted on all the FR topics in parallel.

Areas of divergence: WA and the Irish issues

These two topics are already the subject of ongoing negotiations, which will continue until solutions are found. Much has been made of the ‘backstop provision’ on Ireland. In a letter to the European Council ahead of the March Summit, Donald Tusk, President of the Council, referring to the DWA, stated: ‘As regards the most contentious issue, namely Ireland, Prime Minister May has reassured me that she accepts all options agreed in December to be on the negotiating table. Including the option of full regulatory alignment between Ireland and Northern Ireland if there is no other possibility to avoid a hard border.’

This has not been unreservedly accepted in subsequent UK policy statements. The Irish question may yet prove the undoing of the entire deal.

European Parliament’s view

Adopted in mid-March, the European Parliament (EP)’s latest Brexit resolution focused on the framework for the future EU-UK relationship. The EP believes that the future relationship could take the form of an association agreement based on four pillars: trade and economic relations, internal security, cooperation in foreign policy and defence and thematic cooperation. An association agreement would provide a flexible framework allowing for varying degrees of cooperation across a range of policy areas. The EP advocates the need to include a robust dispute settlement mechanism and governance structures, all respecting the role of the CJEU as ultimate interpreter of EU law. Any framework for the future relationship would also need to respect the integrity of the internal market, customs union and four freedoms, without allowing for a sector-by-sector approach. The resolution underlines, however, that the UK’s red lines are ‘only compatible with a trade agreement, which could form the trade and economic pillar of an association agreement’. The EP notes in this regard, that ‘under an FTA, market access for services is limited and always subject to exclusions, reservations and exceptions.’

The EP then signals its readiness to ‘engage with the UK on the basis of the other above mentioned models, provided that the UK reconsiders its current red lines’. Why does the EP’s view matter? The EP has a central role to play in the negotiations and how they turn out. It is directly linked in with those negotiating Brexit for the EU, but more than that, its consent will be required for the final package: the Withdrawal Agreement (WA), including the transition period and the framework for the FR. Moreover, the EP’s formal consent will almost certainly be required, in accordance with the relevant Treaty articles, to the future EU-UK trading relationship. Experience shows that if the EP votes against a proposed trade deal, no matter how long and complex the negotiations to get to that point, it may not merely be sent back for renegotiation. It could fall.

The EU27

All of the above draft elements, including the fact and terms of the transition arrangements, were approved by the European Council (Article 50) when adopting Guidelines on the framework for the future EU-UK relationship on 23 March 2018. It is a cleverly worded document, which, like the EP resolution above, leaves room for optimism. The ambitious Free Trade Agreement (FTA) it sets out is described as covering the economic relationship, with the wider partnership encompassing other elements, including police and criminal justice cooperation. For now, though specific mention is made of family and civil justice cooperation, it is within the framework of the FTA, rather than the wider partnership. But it speaks of needing to explore options. Again therefore, the reader has the sense that, were the UK to loosen any of its red lines, the EU would be willing to be more generous.

Commission guidance

Apart from these big policy signposts, the EU is constantly publishing insightful guidance and background materials; see, for example, the slides used by Mr Barnier to illustrate Brexit, including the possible models for the FR and how the UK’s red lines narrow the choices; and another showing the stages of the Brexit Process.

What are the Bar’s Brexit priorities at this stage?

At the time of writing, 26 Bar Brexit papers have been published, the most recent focusing on Mutual Recognition as a Principle of the Future Relationship, prompted by May’s call for a comprehensive mutual recognition arrangement in her Mansion House speech. The Bar, through its Chair, the Bar Brexit Working Group, in cooperation with the EU Law Committee and others, continues to promote the Bar’s priorities both domestically and on the international stage.

For example, we are lobbying for a separate track for justice matters in the negotiations and in the future relationship, with a view to preserving access to justice and the rule of law, for the benefit of both UK and EU citizens. In our view, the long-term need for citizens and businesses to be able to enforce their rights and obligations rises above sectoral interests and should not be traded against economic concerns. Brexit will not mean the end, for example, of cross-border child abductions, or injuries sustained in road traffic accidents while on holiday abroad, so the ability to enforce a judgment and obtain a remedy in such cases will survive, as should a framework that enables that. On the criminal justice side, both the EU and UK have expressly endorsed the benefits of future security cooperation and we hope to build on that. In parallel, the Bar is maintaining its efforts to preserve market access for its members, again on a reciprocal basis.

At a national level, the Bar continues to provide evidence to Parliamentary inquiries, and assist with the complexities of the Withdrawal Bill. For up-to-date news, links and events see the Bar Council's Brexit page.

What now?

Assuming that the outstanding separation issues are agreed before the summer – not a given as we have seen – the main focus between now and October will be on defining the framework for the FR. This is very important. Government insistence that the agreement on the transition period gives citizens and businesses much needed certainty does not make it so. Regardless of whether you call March 2019 to December 2020 a transition or implementation period, certainty will only come from knowing what it is transitioning to, or what is being implemented. If any aspect (the outstanding elements of the WA or the framework for the FR), is not agreed by this autumn, the UK risks crashing out of the EU on 29 March 2019. That would not suit either side, though the risk to the UK is greater than to the EU. Though it is not said officially, there are many who consider that, if it becomes necessary, the Article 50, or even transition, period could be extended.

As regards the prospects for the FR itself, views on how to achieve ‘the broadest and deepest possible partnership’ abound. There is not the scope here to analyse all of them. But I can say this: the EU does not want Brexit, but faced with no alternative, it wants to make a success of it. An optimal outcome for trade in both goods and services is considered achievable, but the consensus in Brussels is that the UK would have to commit to the continued application of current and future EU regulation across all sectors. Any future divergence would run the risk of the other party closing the door to trade in the relevant sector. That brings us back to the UK’s red lines and whether there is scope for flexibility. Until the UK converts its policy statements into draft legal texts, the London fog continues.

Evanna practised at the Bar in London until 1990, then spent two years with the European Commission. She worked at Freshfields and as deputy director of an EU thinktank. She established the Bar Council’s Brussels Representation in 1999 and has served as its consultant director ever since. She is a Bencher of Middle Temple.

Spring 2018: a Brussels Brexit stock-take

March 2018 saw several significant milestones on the rocky road to Brexit, not least 29 March marking one calendar year before the UK formally leaves the EU, assuming all remains on track. It is timely to take stock of what has been achieved and look at what we can expect over the coming months.

The month started with Theresa May’s speech on the future economic relationship, delivered on 2 March at Mansion House. This complemented her earlier speech on future security cooperation, delivered in Munich on 17 February. Whilst relatively well received in Brussels and other EU capitals, the core reaction was that the time for speeches is long past. What we need now are draft legal texts. It’s all well and good on the one hand talking about ‘the broadest and deepest possible partnership’ whilst on the other maintaining the government’s red lines of staying outside the Internal Market, the Customs Union and the jurisdiction of the Court of Justice of the EU (CJEU), but how do you reconcile these objectives? As one commentator put it, there is an ‘impenetrable London fog surrounding the British government’s approach to basic issues, like its preferred future trade relations with the EU’. The bottom line is: can a legal framework be devised that balances those competing objectives, is agreeable to all sides, legally workable and enforceable?

On the EU side, efforts to do just that – to draft the texts that will bring Brexit about, and underpin the future relationship, are already well under way. On 28 February, the Commission released a Draft of the Withdrawal Agreement (DWA) which became the ‘joint legal text’ presented by Michel Barnier, the EU’s Chief Negotiator, and David Davis on 19 March. In a colour coded table, the DWA details the areas of agreement and divergence on the so-called separation topics as well as the terms of the transition arrangements.

Draft Withdrawal Agreement: separation topics

Full agreement was achieved on the legal translation of the points agreed in December on citizens’ rights and the financial settlement. Regarding citizens’ rights, that means that British and EU27 citizens who arrive in a new country during the transition period will benefit from the same rights and guarantees as those who arrived before Brexit day. It is worth emphasising that the citizens’ rights that are to be protected in the Withdrawal Agreement (WA) are based on residence. The Bar is looking at citizens’ rights in the wider sense in the context of the future relationship (FR), on which see more below. Progress was also made on other separation topics, such as the winding-up of customs procedures, goods placed on the market, and protection of European trade marks. Negotiations continue on trickier separation ones, including the protection of data and the automatic recognition of judgments, and of course on Ireland.

Agreement on the transition period

The terms of the transition agreement remain as foreseen by the EU27 heads of state in January. In summary, the UK will:

remain bound by the full EU acquis but will no longer take part in EU decision-making – it will maintain all the advantages and benefits of the Single Market, the Customs Union, and EU policies, and should respect all EU rules as if it remained a member state;

have a limited opt-in to justice and home affairs measures;

use the transition period to negotiate, but not enter, agreements with third countries.

Furthermore, transition will end on 31 December 2020 or earlier if the terms of the FR have already been agreed. Negotiations will be conducted on all the FR topics in parallel.

Areas of divergence: WA and the Irish issues

These two topics are already the subject of ongoing negotiations, which will continue until solutions are found. Much has been made of the ‘backstop provision’ on Ireland. In a letter to the European Council ahead of the March Summit, Donald Tusk, President of the Council, referring to the DWA, stated: ‘As regards the most contentious issue, namely Ireland, Prime Minister May has reassured me that she accepts all options agreed in December to be on the negotiating table. Including the option of full regulatory alignment between Ireland and Northern Ireland if there is no other possibility to avoid a hard border.’

This has not been unreservedly accepted in subsequent UK policy statements. The Irish question may yet prove the undoing of the entire deal.

European Parliament’s view

Adopted in mid-March, the European Parliament (EP)’s latest Brexit resolution focused on the framework for the future EU-UK relationship. The EP believes that the future relationship could take the form of an association agreement based on four pillars: trade and economic relations, internal security, cooperation in foreign policy and defence and thematic cooperation. An association agreement would provide a flexible framework allowing for varying degrees of cooperation across a range of policy areas. The EP advocates the need to include a robust dispute settlement mechanism and governance structures, all respecting the role of the CJEU as ultimate interpreter of EU law. Any framework for the future relationship would also need to respect the integrity of the internal market, customs union and four freedoms, without allowing for a sector-by-sector approach. The resolution underlines, however, that the UK’s red lines are ‘only compatible with a trade agreement, which could form the trade and economic pillar of an association agreement’. The EP notes in this regard, that ‘under an FTA, market access for services is limited and always subject to exclusions, reservations and exceptions.’

The EP then signals its readiness to ‘engage with the UK on the basis of the other above mentioned models, provided that the UK reconsiders its current red lines’. Why does the EP’s view matter? The EP has a central role to play in the negotiations and how they turn out. It is directly linked in with those negotiating Brexit for the EU, but more than that, its consent will be required for the final package: the Withdrawal Agreement (WA), including the transition period and the framework for the FR. Moreover, the EP’s formal consent will almost certainly be required, in accordance with the relevant Treaty articles, to the future EU-UK trading relationship. Experience shows that if the EP votes against a proposed trade deal, no matter how long and complex the negotiations to get to that point, it may not merely be sent back for renegotiation. It could fall.

The EU27

All of the above draft elements, including the fact and terms of the transition arrangements, were approved by the European Council (Article 50) when adopting Guidelines on the framework for the future EU-UK relationship on 23 March 2018. It is a cleverly worded document, which, like the EP resolution above, leaves room for optimism. The ambitious Free Trade Agreement (FTA) it sets out is described as covering the economic relationship, with the wider partnership encompassing other elements, including police and criminal justice cooperation. For now, though specific mention is made of family and civil justice cooperation, it is within the framework of the FTA, rather than the wider partnership. But it speaks of needing to explore options. Again therefore, the reader has the sense that, were the UK to loosen any of its red lines, the EU would be willing to be more generous.

Commission guidance

Apart from these big policy signposts, the EU is constantly publishing insightful guidance and background materials; see, for example, the slides used by Mr Barnier to illustrate Brexit, including the possible models for the FR and how the UK’s red lines narrow the choices; and another showing the stages of the Brexit Process.

What are the Bar’s Brexit priorities at this stage?

At the time of writing, 26 Bar Brexit papers have been published, the most recent focusing on Mutual Recognition as a Principle of the Future Relationship, prompted by May’s call for a comprehensive mutual recognition arrangement in her Mansion House speech. The Bar, through its Chair, the Bar Brexit Working Group, in cooperation with the EU Law Committee and others, continues to promote the Bar’s priorities both domestically and on the international stage.

For example, we are lobbying for a separate track for justice matters in the negotiations and in the future relationship, with a view to preserving access to justice and the rule of law, for the benefit of both UK and EU citizens. In our view, the long-term need for citizens and businesses to be able to enforce their rights and obligations rises above sectoral interests and should not be traded against economic concerns. Brexit will not mean the end, for example, of cross-border child abductions, or injuries sustained in road traffic accidents while on holiday abroad, so the ability to enforce a judgment and obtain a remedy in such cases will survive, as should a framework that enables that. On the criminal justice side, both the EU and UK have expressly endorsed the benefits of future security cooperation and we hope to build on that. In parallel, the Bar is maintaining its efforts to preserve market access for its members, again on a reciprocal basis.

At a national level, the Bar continues to provide evidence to Parliamentary inquiries, and assist with the complexities of the Withdrawal Bill. For up-to-date news, links and events see the Bar Council's Brexit page.

What now?

Assuming that the outstanding separation issues are agreed before the summer – not a given as we have seen – the main focus between now and October will be on defining the framework for the FR. This is very important. Government insistence that the agreement on the transition period gives citizens and businesses much needed certainty does not make it so. Regardless of whether you call March 2019 to December 2020 a transition or implementation period, certainty will only come from knowing what it is transitioning to, or what is being implemented. If any aspect (the outstanding elements of the WA or the framework for the FR), is not agreed by this autumn, the UK risks crashing out of the EU on 29 March 2019. That would not suit either side, though the risk to the UK is greater than to the EU. Though it is not said officially, there are many who consider that, if it becomes necessary, the Article 50, or even transition, period could be extended.

As regards the prospects for the FR itself, views on how to achieve ‘the broadest and deepest possible partnership’ abound. There is not the scope here to analyse all of them. But I can say this: the EU does not want Brexit, but faced with no alternative, it wants to make a success of it. An optimal outcome for trade in both goods and services is considered achievable, but the consensus in Brussels is that the UK would have to commit to the continued application of current and future EU regulation across all sectors. Any future divergence would run the risk of the other party closing the door to trade in the relevant sector. That brings us back to the UK’s red lines and whether there is scope for flexibility. Until the UK converts its policy statements into draft legal texts, the London fog continues.